Saudi Oger readying $7.2 billion projects

sweimeh (Jordan), May 16, 2009

Saudi Arabian construction company Saudi Oger said on Saturday it had $7.2 billion in building contracts under execution and planned to expand into Bahrain and Oman to diversify its revenues.

Ali Kholaghassi, vice-president of privately-held Oger, told Reuters on the sidelines of the World Economic Forum in Jordan, that investors and homebuyers were still in 'sit and wait' mode, although banks had started to resume lending.

Confidence would return once wealth funds and private equity come back to the market, said Kholaghassi, who is banking on new business resulting from Gulf government plans to keep public spending expansionary during the downturn.

'Today it's a question of how desperate a person wants to sell and how eager a person wants to buy,' Kholaghassi said in an interview.

'Is it the bottom?... You have a few days of green and then decline, so there is much confidence building needed.'

Oger, a diversified holding group with operations in telecommunications, utilities and real estate, is controlled by the family of late Lebanese prime minister Rafik al-Hariri.

The company has about Dh12 billion ($3.27 billion) of projects under execution in the United Arab Emirates, $1.3 billion in Jordan and SR10 billion ($2.67 billion) in top global oil exporter Saudi Arabia, he said.

'We are working to expand into Bahrain and Oman in the next 18 to 24 months,' Kholaghassi said, shrugging off a downturn in real estate markets that has hit the Gulf, particularly Dubai.

Oger stands to benefit from a Saudi pledge late last year to invest $400 billion over the next five years to build infrastructure in the world's top oil exporter.

Saudi Arabia, facing a budget deficit this year after oil prices slumped off record peaks last summer, is tapping into massive reserves to keep its economy moving during a global recession.

'We are looking at transportation projects, two airports and we are building universities,' Kholaghassi said.

Saraya IPO

Kholaghassi, who is also chief executive of Saraya Holding, added that the Jordanian-based company was holding off on plans to sell shares to the public and list on the Nasdaq Dubai stock exchange until market conditions improved.

Saraya would later seek to raise cash through a private placement or tap debt markets, he said.

'There has been a drop in sales in residential (units) and it does have an impact on our financial requirements,' Kholaghassi said.

Deutsche Bank had been advising on the deal, although it had yet to value the company.

Kholaghassi said less than half of Saraya's $250 million fund launched last year with Arab Bank had been invested and the firm had no immediate plans to set up a new fund.-Reuters